The Central Bank of Nigeria (CBN) has announced its plans to close millions of bank accounts that are not linked to a Bank Verification Number (BVN) in various financial institutions.
This article will discuss the importance of BVN, reasons for the account closures, vulnerabilities exploited by cybercriminals, CBN’s plan to improve agency banking, impact on customers, and exchange rate adjustment.
Importance of BVN:
BVN is a mandatory requirement for operating a bank account in Nigeria.
It captures the biometric data of bank customers in Nigeria and is designed to verify the identity of account holders, prevent fraudulent activities in the banking sector, and track and monitor all financial transactions linked to an account.
Why is CBN Closing Bank Accounts Without BVN?
As per a recent analysis by Piggybank.ng, out of 191.4 million bank accounts in Nigeria, only 57.01 million are registered BVN numbers.
This means that a significant portion of bank accounts in the country are not linked to BVN.
This gap between the number of registered BVN numbers and bank accounts is concerning as it provides cybercriminals with an opportunity to exploit vulnerabilities.
To clean up the banking sector and reduce fraud, the CBN has announced its plans to close bank accounts that are not linked to BVN.
Vulnerabilities Exploited by Cybercriminals:
CBN’s Director of the Risk Management Department and Chief Risk Officer, Blaise Ijebor, highlighted three areas where cybercriminals are exploiting vulnerabilities.
The first area is Tier-1 accounts, which are dominated by digital banks or fintech firms and allow customers to open an account with minimal documentation, making it an easy entry point for hackers.
The second area is banks that do not meet regulatory requirements, potentially creating a second loophole for fraudulent activity. Lastly, hackers can exploit any vulnerability to access bank accounts.
CBN’s Plan to Improve Agency Banking:
To reduce the risk of fraud, the CBN is currently working on improving agency banking and enabling agents to register BVN.
This move will help transfer Tier-1 accounts to Tier-2, ensuring more customers have their BVN linked to their bank accounts.
Impact on Customers:
Customers who fail to link their bank accounts with their BVN risk losing access to their accounts as CBN plans to close such accounts.
It is, therefore, advisable for customers to ensure that their bank accounts are linked to their BVN to avoid being affected by this exercise.
Exchange Rate Adjustment:
As per recent reports, the CBN may have made a slight adjustment to the official exchange rate of the Naira against the United States dollar.
The Naira has been trading at an all-time low against the dollar, above N463 since the start of Q2 2023, and on Wednesday, April 5, 2023, it depreciated against the US dollar across all foreign exchange markets.
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